The Russian president made a snap concession to let the UN blue helmets go beyond the contact line to a wider area, which is currently patrolled by international monitors from the OSCE, a Vienna-based security institution.

"In light of thoughts voiced by Angela Merkel, the Russian leader indicated a readiness to update the functions of the aforementioned UN mission", a Kremlin readout of the phonecall said.

The US has also welcomed the Russian proposal, but Ukraine has voiced reservations on the small print.

"We see it potentially as a pathway to restoring Ukrainian sovereignty and also territorial integrity," a US State Department spokeswoman said on Wednesday.

Kostiantyn Yeliseyev, an aide to Ukrainian president Petro Poroshenko, told the Reuters news agency on Thursday that "the devil is in the detail" of Russia's UN text.

He said UN peacekeepers must patrol the Ukraine-Russia border and that Russian soldiers must not take part in the mission.

He also said EU sanctions should stay in place until the Minsk agreement was fulfilled.

Poroshenko has warned that Putin's UN idea could be a ploy to retain control of occupied territories and to legitimise the self-proclaimed Donetsk and Luhansk "republics."

"[The mission's] purpose should not be the preservation of Russia's occupation and the legalisation of the Russian military presence", Poroshenko said on 7 September.

EU sanctions

The EU foreign service has not taken a public position on the UN proposal.

But EU states, on Wednesday, extended the life of visa bans and asset freezes on 149 people and 38 entities deemed responsible for "undermining the territorial integrity of Ukraine".

The list includes senior Kremlin aides and personal friends of Putin.

The situation in Ukraine "did not justify a change in the sanctions regime" the EU said in a statement.

Opinion

While few people in Europe have heard of the 'Achmea' ruling, the case will have far-reaching consequences. Member states must understand the implications of the case quickly - especially those considering ratifying the EU-Canada trade agreement.